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General Motors Co., which has been struggling with the impact of its massive ignition switch recall, took another hit Wednesday when a Morgan Stanley analyst said the company may fall behind in a major industry shift.

Analyst Adam Jonas said that the industry is entering a period of significant technological change, brought on by the potential of electronic and self-driving vehicles. The rules for what it takes to be a successful car company are changing, which he says could hurt a number of companies that can't keep up. Jonas also noted that GM faces challenges in a slowing US market and changing global markets.

The analyst lowered his earnings estimates to well-below market consensus and dropped his price target on GM's stock to $33 from $49. He gave the U.S. automaker's stock an "Underweight" rating. Jonas said that there are many improvements at the new GM but the stock is "cheap for a reason."

Newer, nimbler companies like Tesla Motors, he argues, have an advantage because their pick of engineers to help innovate. Tesla also threatens to become a tougher competitor as it ramps up its planned battery factory.

Shares of General Motors fell 2 per cent to $33.82 by midday.

GM said in a statement that it will continue to dedicate itself to "building the world's best vehicles, satisfying our customers and generating solid business results over the long haul."

The analyst also lowered his earnings estimates for Ford Motor Co. Wednesday and reduced his target price on the stock to $17 from $20, noting slower gains overseas and increased competition in the US.

Shares of Ford, which could not be reached for a comment, fell 19 cents to $15.91 amid a broader market uptick.